Financially-troubled Electricity Supply Corporation of Malawi (Escom) says it is losing a whopping K1 billion monthly through illegal connections facilitated by its employees nationwide.
Escom director of administration and human resources Dafter Namandwa made the revelation on Saturday during a Fourth Quadrennial Meeting at Linde Motel in Mponela, Dowa, where the power utility ushered in new office bearers for the Escom Staff Union (ESU).
Revelations about Escom losing K1 billion monthly to illegal connections come as the Malawi Energy Regulatory Authority (Mera) is today launching consultations into Escom’s 68 percent base tariff hike application in Blantyre. The news also comes hot on the heels of an Escom board admission of blatant abuse of procurement regulations that have cost Escom dearly in recent years.
In his remarks, Namandwa said the illegal connections are paralysing Escom’s revenue generation, a development he warned could lead to the company not giving benefits to its employees due to losses.
He said: “We are losing billions through illegal connections every month. Most of the illegal connections are facilitated by our own members of staff. So, I was appealing to them that they should stop facilitating illegal connections because at the end of the day, they are actually stealing our revenue.
“Employees want increments and loans. So, they will not be able to get those increments and loans if they are facilitating illegal connections because they are draining the resources for the company.”
But in an interview, newly-elected ESU president Charity Harawa raised doubts about Escom employees facilitating illegal connections, saying her union’s membership is enlightened on the repercussions of engaging in illegal connections.
She argued that it could be former employees of the company involved in the malpractice as they are familiar with the corporation’s operations.
Said Harawa: “It is true that there are illegal connections, but we, as the workforce, want to ensure that these malpractices are dealt with if indeed it is our members who are facilitating illegal connections.
“The challenge could be other people who were in the system and they know what Escom is all about and they can come up in terms of illegal connections.”
In her capacity as ESU president, she said her focus will be on change management both in Escom as an institution and among employees to improve efficiency.
Reacting to revelations of the magnitude of the losses, Consumers Association of Malawi (Cama) executive director John Kapito feared the development may have an implication on the consumers as they are forced to pay high tariffs when some people are getting free power because of illegal connections.
He said: “If you have illegal connection it becomes a cost on the company because it is generating power, but it is not collecting revenue. It is supplying power without collecting [revenue].
“Therefore, it becomes difficult for the company to start thinking about whether they can come out with a quote on how much electricity cost. This is contributing to high tariffs of electricity.”
During the meeting, 72 delegates were drawn from across the country to elect new leaders who among others also include Joseph Kamwendo as the secretary general and Everson Chigona as the treasure for the next four years.
Today, Mera is starting the regional hearings of Escom’s base tariff application following the end of the four-year second base tariff, which ran from 2014 to 2018.
In a statement made available to The Nation, Mera said the hearings are a legal requirement under Section 30 of the Energy Regulation Act of 2004 and sections 16 and 17 of the Electricity Act of 2004 that before the Authority approves a new base tariff or a new tariff adjustment formula, the proposed tariff revision should be published and public hearings be held to allow stakeholder participation on issues that affect them.
Mera said the hearing sessions will afford stakeholders, including the public, an opportunity to understand the basis of the proposed base tariff and a new framework for coming up with the base tariff which reflects the unbundled electricity market in Malawi.
In an earlier interview, Kapito protested against Escom’s proposal to increase electricity tariffs, arguing it is unjustifiable considering the current state of in the energy sector.
He said in the past four years, Escom had another tariff hike but there have not been any improvements in their services.
Similarly, energy expert Grain Malunga argued that while increasing the cost of electricity would make business sense, the increment could as well impact economic gains made this far.
But in the tariff base proposal which the utility body submitted to Mera on April 20 2018, Escom argued that the average cost of supplying a customer with electricity is K126 per kilowatt per hour (kWh), according to the 2018 Cost of Service study.